Audit: University of California hid $175M in budget reserves from state

The administration of the University of California (UC) system hid $175 million in budget reserve funds from state officials, a new review found, prompting the state’s auditor to call for “significant change” at the top to strengthen public trust in the system.

In the audit, released Tuesday, State Auditor Elaine Howle urged California Gov. Jerry Brown and other lawmakers to increase oversight of the office of President Janet Napolitano.

In a letter accompanying the audit, Napolitano, a former U.S. Secretary of Homeland Security, said the report “fundamentally and unfairly mischaracterizes” her office’s budget “in a way that does not accurately capture our current operations nor our efforts and plans for continued improvement.”

She said, for instance, that nearly half of the amount cited, $83 million, supports “groundbreaking research” in healthcare, as well as investments in public policy and sustainable energy, among other areas.

In the report Howle also said Napolitano “intentionally interfered” with her efforts to survey how well the president’s office serves its 10 campuses. Howle said statements that were critical of Napolitano’s office were “removed or substantially revised,” with negative ratings changed to be “more positive.”

The university system, one of the largest in the USA, enrolled 251,714 students last fall. Among its alumni: 61 Nobel Prize winners, 16 Pulitzer Prize winners and 90 MacArthur Foundation “Genius” grantees, according to the system.

The audit also found that UC pays more for top administrative talent than other state agencies, with Napolitano’s top executives earning “significantly higher salaries” than state employees in similar jobs. The 10 executives analyzed had combined salaries of $3.7 million, or $700,000 more than those of their highest-paid counterparts statewide, after adjusting for cost of living.

In 2014-15, Napolitano also maintained many more top managers than needed, the audit suggests. Executives at the larger California State University (CSU) oversaw 13 more campuses than UC and 200,000 more students, yet CSU has only seven executive-level staff, while Napolitano had 42, the audit found.

Napolitano said most of Howle’s recommendations are reasonable, but added, “For others, we agree with the spirit and intent of the recommendation, and will take a slightly varied approach to address the underlying concerns.”